tv Nightly Business Report PBS August 26, 2013 4:30pm-5:01pm PDT
pharmaceuticals. is this the beginning of a biotech merger wave? >> and generations of debt. why a growing number of parents over 50 are struggling to pay off not only their own college loans, but also their children's. all that and more tonight on nightly business report for monday august 26th. good evening, everybody, i'm bill griffith, in for tyler mathisen. the concerns about what u.s. secretary of state john kerry called undeniable evidence of a chemical weapons attack in a rebel controlled area of syria, and what role the u.s. military might play in response sent the markets lower in the final hour of trade today. here's what secretary of state kerry said during a news conference in washington this afternoon, in a clear warner to bashar al assad. >> president obama has made clear to the assad regime, that this international norm cannot be violated without
consequences. and there is a reason why no matter what you believe about syria, all people in all nations who believe in the cause of our common humanity must stand up to assure there is accountability for the use of chemical weapons, so that it never happens again. >> the market had been trading higher earlier on merger news and in spite of a sharp drop in july, durable goods orders, but those comments by secretary kerry sent the indexes lower and they did close at the lows of the session, the dow fell by 64 points, ending below 15,000 again. the nasdaq was a fraction of a point lower, the s&p 500 was down 6 points. gold the other way, above $1400 an ounce for the first time since june 7th, when it hit that multiyear low of 1180. the biggest of the merger news, one of the largest deals ever in the drug making industry.
amgen, the huge biotech company is paying 10 a$10 and a half bin for onyx pharmaceuticals. when completed, the deal will give amgen two new cancer drugs, adding to its own cancer fighting medications and current bestsellers fighting osteoporosis, rheumatoid arthritis, skin disorders and more. >> the world's biggest biotech company finally has its foothold in the cancer drug market. over the weekend, onyx pharmaceuticals, accepted a $10.4 billion offer from amgen, after rejecting a lower offer at the end of june. onyx is seen as a leader of cancer treatments and the deal gives amgen access to one of the fastest growing markets in the pharmaceutical space. the driver of the deal, onyx's crowned jewel, a treatment for a rare type of cancer that could see sales of $2 billion over the next several years. >> let's give them an entrance
into the myeloma market which is growing significantly, also onyx has other oncology drugs. >> if approved, the buyout values at $125 a share, which have been trading at $86 before news of the deal first broke in june. >> and while onyx will make money, investors bought the stock after the company rejected amgen's first offer won't be quite as happy. >> after onyx shot down that deal, the shares spiked, wall street expected the company could sell for as much as $135 a share. today's deal doesn't match th e those. shares are down about 6% from them, they're still up big on the year. >> today's deal ranks among the five biggest ever by a biotech, and is the second largest tickover for amgen.
in an industry where taking over a proven drug is seen as a shortcut to profitability. many analysts think we could see more deals in the works soon. >> the focal areas is in the rare diseases and in oncology, company like biomerin. there have been rumors that roche is going to make a bid for alexion. there are a bunch of companies out there that the market is speculating may be next. >> that amgen/onyx deal was not the only big merger announced today, you also had astrazeneca bolstering its pipeline of new cancer drugs as well. agreeing to approve privately held u.s. company for half a billion dollars, also oil and gas producer is selling part of its stake in a natural gas site off the shores of mozambique to an indian company.
and pittsburgh's tms international, which provides services and materials to steel mills announced it is selling is itself. the founders of the hyatt hotel chain and other industrial businesses, that is a cash deal worth more than $1 billion. shares of astrazeneca were slightly lower. shares of annadarko were higher. >> one more merger we told you about that was in the works on friday. was confirmed today. electronics stock exchange operator is buying rival direct edge. the deal will create the second largest u.s. stock exchange. they will trade more shares than the nasdaq and second only to the new york stock exchange in terms of volume of trade. terms of the deal not disclosed. the u.s. government is going to reach its borrowing limit again. this time in the middle of october. treasury secretary jacob lieu
wrote to congress today saying the government will reach that debt limit of $16.7 trillion by mid october. he urged lawmakers to reach a federal budget deal sometime before then. good news for drivers to tell you about. gas prices are falling. the lundberg survey shows prices at the pump are down 4 cents a gallon over the past two weeks. now averaging $3.56 a gallon. 20 cents lower than the same time last year. the biggest fiscal challenge facing our country may be years away from right now. the survey conducted by the national association of economics finds that nearly half the experts surveyed cited budget gaps expected in the 2020s and the 2030s as the top financial program compared with 37%, who said the projected deficits over the next ten years are more of a concern. another possible challenge to the economy, fears about a slowdown in the housing
recovery. during the worst of the foreclosure crisis investors, many of them big money hedge funds swooped in to buy up thousands of properties, which pushed prices higher than anyone expected. that helped jump start the housing turnaround. now there are signs that those same investors may be pulling back. diana olick explains what that may mean for the housing market. >> when we visited atlanta based american home earlier this year, the ceo was buying and rehabbing foreclosures at a fast clip. >> we own 2500 homes in atlanta, charlotte, nashville, orlando and tampa. >> today he says he's still buying, but he admits some investors are pulling back. undergoing a digest onperiod after exponential growth. >> that means maybe a slowdown in how many homes they acquire. it may mean letting go of some employees and areas that it doesn't make sense or maybe you
grew too fast, but it's really institutions starting to prove or work toward profitability -- >> investors made up just 16% of home buyers in july. down from 22% in february, and 25% in early 2009. in some of the hardest hit markets, investors made up more than half of the buyers during the worst of the foreclosure crisis. now they're finding less to buy and what there is is more expensive. >> you definitely see the investor market cooling. on one hand you had wall street early in the season buying as many homes as they possibly could, and then at some point becoming frustrated because you just couldn't buy in bulk, the kind of inventory they've been able to get in 2012 and 2011, those investors started to pull back. >> last spring, they were running seminars for small investors, and the classes were packed. it's all anyone was talking about at cocktail parties as home prices were rising again,
people were pulling money out of their 401(k)'s to buy properties, now not so much. >> the volatility that was once the private domain of wall street has come to main street, that has created all sorts of risks for investors and lenders as well as regular american home buyers. >> it was inevitable as housing is yet another tradeable asset class, like mortgages were a decade ago. for nightly business report, diana olick in washington. while a real estate market may be showing signs of cooling, hot and dry weather is prompting big movements higher for grain futures, soybean prices hit an 11-month high today. with corn touching a one-month high, and wheat futures hit a three-week high as hot and dry weather is threatening to cut output. >> hot and dry weather is contributing to a rash of wildfires striking the west. there was some improvement in
and around yosemite national park. a fire so severe, it's threatening the water and power systems in san francisco that are some 200 miles away. scott comb joins us now from the edge of that wildfire in california. over to you, scott. >> reporter: thank you. it is relatively quiet here now. a subtle shift in the wind and this community and many others like it on the edge of yosemite would actually be literally and directly in the line of fire. that explains why there's a very large firefighting presence here, but protecting the city is one of the many tasks at hand. the fire has burned an area larger than the city of chicago. and growing. tree by tree, branch by branch, they're attacking it on the ground and from the air. progress is slow, and the fire is maddeningly unpredictable. >> one of the challenges, the fire is going to start making
its own weather. we've seen significant down draft winds going in all directions. >> this is the largest of a dozen fires burning just in california. a strain on the state's limited resources and fire season is not over yet. >> this is august, what's going to happen in september in terms don't know. >> california has already spent a quarter of its firefighting budget for the year. the federal government will help, but fires burning in 11 states are straining those resources too. a billion dollars spent and counting. with more and more development in areas prone to fire, the strain isn't likely to ease any time soon. normally a sleepy town on the edge of yosemite. fire crews are going door to door, clearing out combustibles in case the initial defenses don't hold. >> we have engines spaced out in this area. that's one of the things we look for is spot fires. and we deal with those first. >> the town is also a base camp for some 3,000 firefighters on
the front lines, including jordan freeze's dad. >> i worry about him all the time. >> here on the edge of the inferno, they're living on the edge. it's one of the worst fires in california history. >> the situation with san francisco which is very far from here, the city is not directly affected by the fire, but the reservoir in yosemite supplies much of san francisco's water supply, and the hydroelectric power for the city. some of the resources have been damaged somewhat. so far, no interruptions, governor brown has declared a state of emergency. bill? >> thank you. governor brown pointed out, it's not even what we call fire season in california. that doesn't come until the fall. thank you, scott. still to come, there was microsoft, which saw its stock pop. which chief executives may be the next to go and see their shares rise when they do? we'll get to that coming up. first, a look at how the international markets closed today.
the ongoing battle between cbs and time warner is entering its fourth week. now with the u.s. tennis open starting today, college football games kicking off this weekend and then the nfl the following weekend, are the two sides any closer to an agreement? and which side will cave first? julia bors ten has the latest? >> 24 days and counting. >> time warner cable has dropped cbs. >> that's how long time warner subscribers have been enduring the blackout.
to keep customers from cancelling their subscriptions, they're offering a range of free perks, giving away the tennis channel, temporary access to stars kids and family canals, gift cards to watch under the dome. even indoor antennas. the cable giant is ramping up their offerings as hits like "how i met your mother" and "the big bang theory" give cbs growing advantage many. >> we think cbs is in the cat bird seat here and they have the upper hand. >> nfl season doesn't start for another two weeks and the fall tv season doesn't start for two weeks after that, the pressure is on when college football starts. >> viewership for sec football is triple that of other comparible conferences. if this deal is not done by this weekend, time warner cable is probably looking at further share losses in its subscribership. >> the two companies will strike
a deal by this weekend. he warns if time warner cable can't get cbs back on the air by the start of the nfl season, the cable giant will start to lose subscribers. tyson was the worst performing stock in the s&p 500. the shares of the meat processor came under pressure after a wall street analyst cut his rating on the stock to neutral. citing a steep increase in production among its competitors. the stock dropped 7% today. meanwhile, big lots gets an upgrade from jpmorgan. that sent shares higher. the stock is in neutral, citing new leadership, a new look and a new strategy at the company. big lots is refocusing on its core operations and trying out new programs like furniture leasing. that stock rose more than 5% at
close to 34.02. city put a buy rating on 3d systems saying the 3d printing market will more than triple over the next five years. according to that, 3d systems is best positioned to capitalize on potential market opportunities. he has a $60 target on that stock. 3d systems grew. stratus rose to $150 a share. tesla's model s car is among the top five selling luxury and sports cars in california. according to the california new car dealer's association, tesla is outselling porsche, volvo and land rover in that state. their shares rose 1% today, hitting a new all time high. and for the year, the stock is up more than 400%.
and shares of sotheby's rising after daniel lobe of third point raised his stake in the country. lobe who disclosed a 5.7% stake in the auctioneer, plans to engage with a dialogue. the board and management teams are committed to building long lasting value for all shareholders. the stock rose almost 3% to 47.21. another high profile activist investor is getting out of jcpenn jcpenney. bill ahman who argued publicly with the retailer's board will sell his entire stake in the company. it's roughly 39 million shares, the news came out after the market closed sending the stock lower, in the regular session, jcpenney fell 1%. microsoft shares may have slipped today, but they are still up 5.5% since news broke friday that steve bomber would step don as ceo. that news has investors
wondering what other stocks mitrally if the ceo unexpectedly left the company. joining us now to explore that is the professor of management at new york university's stern school of business. thanks for joining us, professor. >> happy to be here. >> is it as simple as saying that shareholders lose -- thoughts about a management team and they're happy when they're leaving, is that why a stock rises? >> certainly when investors are lacking in confidence in a ceo and that ceo leaves there's going to be a bump in the stock price, what some of the major reasons you would see a big bump like microsoft, there's a big amount of value in the organization, whether it be cash or cashflows from things like windows and the office suite. and the concern that the ceo is going to waste that money trying to chase down some new opportunity. when that cash and the treasury is protected, the investors are going to react positively to that kind of a change.
>> do companies like dell or apple fit that description? if michael dell said, i'm stepping down or tim cook at apple said the same thing, would the stocks pop on the news? >> we've already seen ikon push the stock with his investment, 6 months ago it would have fit that bill. apple, maybe we're getting to that territory. people are getting concerned enough that people may misspend that money. >> what about on the other side, companies where the ceo were to decide to leave, the stock may drop, go the other direction, maybe a facebook with mark zuckerberg or yahoo with marissa meyer who's been successful in the last year. >> certainly if there was a turnover event like that, especially if the market was uncertain why the ceo was leaving, they may read negative things into that. and meyer at yahoo has seen the stock price bump in pausht because of investor reaction to
her, if you think about places like a.m. zoon, there's a founder, ceo who's been the leader and innovation, that kind of turnover would be seen as disruptive to the organization. >> i want to ask you about jcpenney, you heard our report a moment ago, that bill ahman is pulling out his 39 million shares. here's a company that's had so many issues and a resolving door of ceo's, let's say the current ceo is forced out or steps down or whatever, what happens there? >> jcpenney would be an interesting situation, i think there's a very clear sense that there's a leadership void, there's no real clear direction for the firm, given how many turnovers there's been, he's an interim ceo to some extent, if he was forced out, i think people would be very scared there was a clear sign of dysfunctional management even at the board level at that point. >> not to discredit our premise, are we giving too much creto
a ceo and his or her impact on a company's bottom line? >> i think the market will tend to do that in the sense that the market will be drawn to celebrities good or bad. the reality is, the ceo has an enormous impact on the organization by choosing how to allocate resources, by deciding what the incentive struck door is for the firm, by deciding the reporting structure. i think long term we're not overstating that from that perspective. >> jp edgars, thanks for joining us tonight. >> thanks for having me. over 50 and weighed down by student loans, why a growing number of parents find themselves struggling to pay off their kids student loans as well as their own loans from college. here's a look at how commodities, treasuries and currencies performed today.
total student loan debt in the u.s. has now topped $1 trillion, that's second only to mortgage debt. now there's a growing number of older graduates who are not only struggling to pay off their own student loans but grappling with new loans taken out by their children. >> meet the rose family, two generations struggling with student loan debt. together they owe $136,000. at 51, charlene hoped to put away money for retirement, instead -- >> about 50% of my paycheck goes toward my student loan debt. and that's quite a bit. >> charlene is paying off her own $51,000 loan after getting a masters. and she and her husband pay much of her children's college dits too. all are still in school. ebony owes 27,000.
victoria 83,000. ricky owes 25,000 on loans and pays some of his tuition to help mom. >> i'm doing temp work to have extra money coming in. >> charlene is part of a group of americans 50 to 59 years old, who owe $112 billion in student loans. that's more than triple that age group owed in 2005. >> we used to think of student loans as temporary. for some american families they're becoming a lifetime or multigenerational burden. >> we're looking at $1400 a month. >> melissa is a credit counselor who helped charlene manage it all. >> 30% of my clients are in that bracket, they're worried about paying their children's loans or their own loans. a lot of them say, i'm going to die before i pay it off. >> the return on investment to higher education is about the greatest return an individual can secure. it's the best way to get a job, to keep a job, or to get a
better job. >> her tuition is going to go up. >> charlene says she has no regrets. >> whatever sacrifices i have to make for them to go, i'm willing. and they're willing too. they're willing to help. >> you just took. >> after all, a mother's love knows no bounds. for nightly business report. >> we honor the passing of one of wall street's true pioneers, muriel seibert was the first woman to own a seat on the new york stock exchange. she passed away over the weekend in new york city from complications of cancer. she bought the seat in december of 1967 after months of struggling to break into the old boys world. she went on to establish her own investment firm. she was the first woman super inten dent of banking. she was just shy of her 81st birthday. she will be sorely missed but never forgotten.
>> i served with her, she was a positive force. you said a pioneer, she really was a trailblazer. >> small in size, but huge in stature, and she loved helping the underdog on wall street, didn't she? >> she really did, she will be missed. that's nightly business report for tonight. thanks for watching. >> have a great evening, we'll see you again tomorrow. nightly business report has been brought to you by -- >> sailing through the heart of historic cities and landscapes on a river. you get close to iconic landmarks, to local life, cultural treasures. viking river cruises, exploring the world in comfort.